In brief:

The avalanche of apps and app stores (nearly 70, according to WIP Connector) turns up the pressure on developers and other ecosystem parties to find ways to make money selling apps. How are apps discovered and promoted? And more importantly, how are these app emporiums and boutiques going to handle the simple CRM to encourage the all-important return purchase?

After all, it wasn’t so long ago that a study from Pinch Media, which analyzed over 30 million downloads from Apple’s App Store, reported that just 30 percent of people who buy an iPhone application actually use it the day after it was purchased. And the numbers plunge from there: after 20 days, less than 5 percent of those who downloaded an application are actively using it.

A lot of open questions. But one thing for certain: competitive differentiation is in the business model. And we know from the findings of a recent Netsize Mobile Trends Survey of +1,000 professionals and practitioners that the 4-Cs (Convenience, Compatibility, Choice and Charging) are key requirements for a winning app store (and so for the developers that hope to make a living selling their apps). Netsize is gearing up to release new (unpublished) survey results and a new report that reveals attitudes toward business models and what will enable real and significant app sales. Watch this space!

MAXIS, ONDEEGO & AMDOCS

What is the app store landscape and what are the monetization models?

This was also the topic at Mobile Web & Apps World Forum, a CTIA partner event organized by my esteemed colleague Ajit Jaokar. (Again, I congratulate Ajit on organizing a standing-room-only event dedicated to answering the tough questions around app fragmentation, monetization and how to make it all work. Thanks also for inviting me to speak during the SuperSession looking at mobile advertising and in-app opportunity moderated by mobile authority Chetan Sharma. It was an excellent session with Joe Lally from MTV Networks and Jerry Rocha from Nielsen and Gary Schwartz, CEO of Impact Mobile, and one that provides a great deal of material for future MSG analysis and follow-up.)

However, it was the session on personalization and content discovery, presented by Mike Lurye, Amdocs Interactive, Director of Product Marketing, that got people thinking about the business value of granular subscriber intelligence (anonymized) and ways it can be used to get consumers to the content they will appreciate and without making them search for it. To drive home the point Mike didn’t use marketing-speak. He used case studies from mobile operators in the U.S., Europe and Asia Pacific. (You can download all the speaker presentations here.)

I used the opportunity of our in-person meeting to discuss the larger issues around app store marketing and pick up on a fascinating conversation we had weeks earlier (in preparation for Mobile Monday Austria) delving into the tough choices facing developers.

Certainly, developers can jockey for position in the Apple App Store (and others), where getting featured (placed where people can find you easily) is the only way to build a business. But developers can also align themselves with retailers/operators that seek differentiation through innovative business models emphasizing customer service, easy discovery or local culture.

The latter works for Malaysian mobile operator Maxis. I am a great admirer of the carrier’s app store focus and mission: “to nurture and foster interesting developer applications for our community.” (This and more in this must-see video interview with Nava Wathan, Director 1Maxis, Maxis Communications.) Maxis has become the place to go for “something that is Malaysian.” Surely, many more mobile operators can pursue a similar strategy to stand out from the crowd (and build a successful business for their business ecosystems of developers and customers).

At the other end of the spectrum, Ondeego also “gets” it. It launched AppCentral, a mobile app store for the enterprise last fall becoming the first mobile application store meeting the unique needs of the enterprise workers and their IT departments. For enterprise employees a one-stop shop means that they can select what they need (serious apps) to do their job. For developers it means a channel to a difficult to access market and a chance to sell their productivity and enterprise apps direct to professionals who will likely buy.

PODCAST INTERVIEW WITH MIKE LURYE

First, credit where credit is due here. Although people have tweeted about the simplicity and originality of my views on the evolution of the app landscape and the marketing strategies that will help everyone make money, it was Mike who came up with the popular Supermarkets/Farmers Markets analogy.

I caught up with Mike in-person following the Web & Apps World Forum event to talk about marketplaces and ideal models for making money – now.

Here an excerpt:

APP STORES & STOREFRONTS: “The main difference between an app store and a traditional digital commerce storefront is actually not that it sells apps, but that it is based on a certain business model that’s been pioneered by Apple. Stores selling apps have been around for a very long time but Apple changed the game because they set up a business model that opened up the opportunity to get to market for a much broader range of developers and they did so by establishing very straightforward business terms that are the same for everybody.” But not all app stores must sell apps. China Mobile, for example, sells traditional digital merchandise (ringtones and wallpapers and so on) on the storefront they call their app store.

MAXIS MODEL: This mobile operator has cleverly defined the segment it will go after: the local population and local developers. “So, their store is never going to be very big, they acknowledge that. They are not trying to compete, they are trying to co-exist….This is a good strategy because when you know your customer and when you know what you want to offer to your customer that is valuable to them, and you know who is going to build it which is a local developer community, you are poised for success.”

FARMERS MARKETS: The close customer relationship is what makes a farmers market special. And mobile operators have a close customer relationship they can build on – if they recognize their real role. “The owner of the farmers’ market doesn’t get in between [the] transaction…There is a direct [customer] relationship and the owner of the farmers’ market acts as a facilitator. They make it work.” How? Through payment services, personalization insights and scale.

CALIFORNIA GOLD RUSH: If you are about to pack, think again because it may have peaked. Apple found gold in apps and now everybody is moving to California (literally). “Now, guess what, not everybody who came to California at the time of gold rush became rich, some people did, but most actually didn’t, so that is what is going on right now. Everybody and their brother wants to have an app store; some people have a well thought out strategy. Maxis is an example of that. Some people are doing essentially a ‘me-too’ kind of a thing, and there is actually nothing wrong with that in principle as long as you realize that that’s what you’re doing.”

WHITE LABEL: Mike says it’s a low-risk model. The not-so-good news: it’s unlikely to build subscriber loyalty. “There is no leverage of the operator’s unique capabilities, there is no more value for the subscriber to purchase an application in that app store versus the original app store from the white label supplier themselves. There might be some cost advantage…but fundamentally it’s not a model that will differentiate the operator.

TAKE A PAGE FROM AMAZON: Personalization has made Amazon a success. “This is the business they are in: the business of personalization. They are offering it now as a platform to others. You do that search, you bring results not only from Amazon, but [also] from Amazon’s competitors and that’s OK by Amazon because they build such a sophisticated platform that now empowers [the] ecosystem.
***
MY TAKE: Are we on the brink of new business models or is history repeating itself? And — even if it is very much a repeat of the mobile portals – what will guarantee success for the developers and retailers this time around? At the moment, developers have a handful of choices: boost word-of-mouth promotion (tough and tedious, which is why Mob4Hire’s peer app recommendation is an interesting one to watch), mobile advertising (complicated and unpredictable, which is why we are all searching for better ways to deliver the right advertising to the right demographic) and placement (tricky and transient, which is why GetJar has cleverly created a model where developers pay for shelf space). What role will personalization play (even in a pre-paid environment)? My ongoing research into recommenders brings me together with mobile operators already wringing value out of granular analytics to help people discover content they’ll likely appreciate. A prime example is Hong Kong’s CSL, an operator I showcase in my upcoming report, that has harnessed personalization to support My Net, its own (branded) mobile Internet service. Clearly, personalization is moving up the business agenda (as it should) because it’s a way mobile operators can generate revenues (helping people find and buy what they want) and stay in the game.

* * *

LISTEN TO THE PODCAST HERE: [13:00]

Disclaimer: Netsize is an MSG supporter. Amdocs is not an MSG supporter.  However, ChangingWorlds, a company acquired by Amdocs, has published a by-lined thought leadership column series on  MSG. Peggy Anne Salz has also spoken at invitation-only  thought leadership events organized by Amdocs for its operator clients.

IS THE APP INDUSTRY WORTH NEARLY $7 BILLION? Will Apple do nearly a billion dollars in revenue in its first year of the App Store? While the exact numbers are debatable, you can’t ignore the monster success Apple has had with its store (which also drives device sales, by the way). How much money has Apple made? This post, titled Apple has made no more than $20 – 45m in revenue from the app store, gives us a figure. One I might add is not too shabby for a product yet to see its first birthday. What makes this more remarkable is that Apple has captured between 1-2 percent total market share worldwide (including feature phones), and only 10.8 percent share worldwide in the smartphone segment. Few (save Juniper) have taken a stab at valuing the total app industry.

StatCounter’s recent announcement that Opera Mini surpasses the iPhone’s Safari as the most popular web browser for mobile phones is testament to the potential of the greater industry. Opera Mini is the most downloaded Java application of all time. So, while I am excited about the enthusiasm for the iPhone, I find the conversation is missing a big-picture perspective. The question we should be asking is: What is the total app market worldwide really worth? After all, Opera Mini’s success story underlines the potential of the app market beyond just the iPhone.

So, allow me to take a shot at valuing the total app industry, worldwide, for pay-apps (apps you pay to own on your phone).  This is the total value excluding Of course, we have to exclude free apps like Opera Mini.

In a nutshell: If Apple can do nearly $1 billion in sales its first year and has 10.8 percent smartphone market share worldwide, how much is the total smartphone app market worth?

This post from AppleInsider tells us that Apple could do $777 million in App Store downloads in 2009.

A 10.8 percent worldwide smartphone market share implies that the total mobile app market is $7.2 billion, if all smartphone users spend as much on apps as iPhone users do. We know that this won’t be the case. A much more likely scenario is one in which smartphone users will spend far less.

So, let’s assume users with these handsets (other than the iPhone) spend half (50 percent) of what iPhone users on App downloads. Now let’s do the math.

$7.2 billion is the extrapolated industry valuation of direct revenue from apps if consumers spent as much on apps for other platforms as they do the iPhone. Let’s take $7.2 billion minus $777 million (iPhone app share), and multiply that by 50 percent. That gives us a valuation of $3.2 billion for the non-iPhone app market, or $4 billion total, including the iPhone.

($7.2 billion – $777 million) * 0.5 = $3.2 billion non-iPhone app market.)

Given these assumptions, the total addressable market for non-iPhone smartphone users is approximately $3.2 billion in 2009 alone. This, of course is direct app revenue, and does not include advertising, in-app sales, carrier data revenues, feature phone app sales, and other yet-to-be-developed revenue models.

What does this figure represent? Is this pent-up demand in search of a marketplace? It sure looks like it. In any case, the number is staggering, and why this fact hasn’t gotten more attention is surprising.

But I can tell you from my experience at Opera, the success of the iPhone app store is great for the industry. Apple’s app store (although benefiting from massive multimedia marketing campaigns) is the proof-point our industry needed to see its own much greater potential. Apple gets high ranks for making the job of marketing or selling an app that much easier. Mainstream consumers now realize it’s not rocket science to load an app on their phone. Now it’s part of an every-day routine for many mobile users.

Apple has created a market, but does it dominate it?

AdMob’s Mobile Metrics Report recently released compares mobile Web usage to market share of mobile devices. As this chart from AdMob shows, the iPhone literally tops the charts for mobile Web usage – and that despite the fact the device only accounts for 10.8 percent market share of devices (according to Gartner’s latest estimate).

Symbian is next, followed by RIM and Windows. With the launch of the Palm Pre, greater penetration of Android devices soon to come, and Microsoft opening its Windows Skymarket app marketplace, it’s a safe bet that consumer spending on apps on other platforms might total half of what iPhone users spend on apps (If you disagree, please make your case for lower estimates in the comments below, or email me – ben@mobspot.com .)

Let’s put a growth-figure in here. If we accept the figures from Ovum, which predict 15 percent per year growth for smartphones, then you end up with an app industry worth nearly $7 billion.

Not bad. We are excited about the App Store concept, which has taken much of the pain out of discovering and buying apps. Now is the time to get equally excited about the opportunity for apps on all platforms.

And why shouldn’t we be excited? Apple’s App store has caused a shift in consumer behavior. It has captured our interest (even passion), encouraged us to explore the mobile Web, and put downloading and purchasing apps central to our daily mobile routine.

Where does this leave Apple?

It may be riding the cool factor now, but where is it written that cool apps will only be created for the iPhone? I’m confident developers are already working on more great apps for other platforms.

Apple also doesn’t have a monopoly on delivering a great consumer experience. I’m sure developers are hard at work coming up with new approaches that likewise set the bar.

My take: Apple has created a market. But it has also paved the way for some fast followers to follow suit – and even go one better. I’m excited about the avalanche of apps we’re sure to see available across all platforms, and the impact on mobile industry and consumer behavior at all levels. What do YOU expect?

About the author:

Prior to founding Mobspot, Ben was Director of Global Marketing at Opera Software, where he led multiple record-setting product launches of Opera Mini. Opera Mini is the most downloaded mobile application in the world. He has a BA from the University of Washington and an MBA from Copenhagen Business School.

A major advantage to writing the Netsize Guide 2009 was the opportunity it provided me to connect with 34 C-Level executives for no holds barred interviews to discuss the opportunities/threats/trends highest on their radar. My interview with Mauro Montanaro, CEO Fox Mobile, was more than your typical Q&A; it was an invigorating exchange that we have pledged to continue on a regular basis. The reason: We understand the pivotal importance of mobile search, content discovery, and recommendation in all content-selling strategies moving forward.

It was a trend I picked up on a few years back when I watched the stellar rise of Schibsted, a Norwegian content provider that offered mobile search to help users find and buy its content (and that of its partner content companies) with the help of a solution from FAST, now a Microsoft company. Back then the mobile search industry focused its efforts squarely on winning mobile operators; a perfect fit with content providers (who own the content and need mobile search – as well as discovery and recommendation – to merchandize it) wasn’t a topic.

Fast forward, and mobile content companies are beginning to understand the benefits of mobile search and, more importantly, search merchandising. Why? Because simple Retail 101 tells us customers can’t buy what they cannot find, and, with operator portals on the way out, D2C destinations can best bubble their content offers up to the surface if they are findable in the first place. Paid search schemes round out the model, allowing content providers to monetize their traffic (which can be considerable for large brands, a major reason why so many of them are beefing up their mobile search/paid search strategies).

Which brings us to this week’s news that Fox Mobile (more specifically Fox Mobile Distribution’s consumer brand sites Jamba and Jamster content sites) has sealed a deal with MCN, a provider of search management, search merchandising, and PPC vertical paid search programs. The service will initially launch with the search results of carriers in Thailand and Sweden, and will later extend to other regions. “This partnership is another step to accelerate our endeavor to have mobile content contextually integrated with consumers’ browse and search activities, and also supports our efforts to extend our global leadership in mobile content distribution,” Kaj Hagros, COO of Fox Mobile Distribution, said in a press statement.

By way of background, MCN plugs into the content at the source (the content provider) to connect users to the content (not links to the content, as is the case with other search providers such as Google & Co.). As a result, MCN has announced a raft of recent deals with major mobile operators and a growing number of content providers (nearly 200 in its roster counting Fox Mobile). Beyond making it easier for users to get to content, MCN has developed what it calls “search merchandising,” a term that underlines MCN’s role in joining up mobile search, advertising, and content sales (through its allwords vertical paid search program) by allowing content providers to bid on entire verticals (such as games and music) rather than keywords.

Put simply, search advertising combines MCN’s federated search (delivered via MobileSearch.net, MCN’s white-label search platform) and vertical paid search (delivered through allwords, MCN’s own PPC mobile content promotion program) to make content searchable, findable, and monetizable. (MCN CEO Marc Bookman told me shortly after the allwords launch last year that the program was “generating click-throughs in excess of 45 percent – it’s as high as 90 percent in the comics category – and the highest conversion [sales] rates in the industry.” I’m not sure what they are these days, but I’ll certainly raise that in my next interview/podcast with the company.)

My take: Connect the dots, and Fox Mobile has its eye on the prize: The focus here is very much the connection between mobile search, advertising, and content sales, and creating an optimal interplay between them so that good user experience inspires more searches, which result in more monetization and, ultimately, drive more usage of the services among consumers. And all that without giving over control of the content to a mobile search provider/portal provider.

I was pre-briefed on the MCN tie-up around Mobile World Congress, but Mauro preferred to go on-the-record with his broader views on search, discovery and recommendation – features and functionality that define the company’s evolving content strategy. (You’ll see it all come together around April, when the new Fox Mobile makes its debut, and Mauro walks me through the new suite of services.)

In the meantime, allow me to share an excerpt of our Q&A (below) and (courtesy of Netsize) the complete interview from the Netsize Guide 2009 that started it all (further down in this post):

MSearchGroove

Q: New branding, new company, and a renewed focus on covering the value chain from licensing through production to distribution. What is Fox Mobile’s objective?

A: We want to sit between technology industries and Hollywood – between Silicon Valley and Hollywood. That’s where we want to be, and where we can be.

Q: You were just out there with Nokia, showing clips from Ice Age 3, which is set to come out in July. What other mobile products will follow and how might you distribute them?

A: We will have Flash content ready for July when the movie is released. What you saw today is just an appetizer; it will be followed by a whole suite of products. Distribution can take a number of approaches. This can be with our D2C brand, or it can be through the Nokia Ovi store, or through a download icon on Nokia that we manage globally. It can also be on O2 (a carrier in Germany that we work with). Basically it can be on a number of platforms, which is why time-to-market is going to be critical for mobile content. Lesson number one is that we have to work with the creatives very early on in the game to be sure we get the right content for the best formats. And this you can do if you are media company, not just a mobile company.

Q: How do you create content for so many platforms and keep a lid on costs? We know from MTV, for example, that it’s in many cases a matter of shooting content several times from several angles, including one for mobile. But that can get expensive…

A: My personal advantage is that I am from the entertainment industry. I used to shoot music videos and I used to be a singer. We get around the problem of double-shooting by focusing a lot on animation. As the Jamba brand, we’ve been very strong on animated characters in the first place, such as the Crazy Frog. Likewise, the Simpsons and Family Guy are also animated characters, so the process is just working with script writers and animators to explain the format you want, or just taking snacks [from the animated movie] for mobile.

Q: With so many app stores it’s beginning to look like the early days of the portal out there. It’s a confusing and fragmented landscape. How are you going to choose the stores where you sell, or the formats and operating systems you support?

A: It is more fragmentation, you’re right. As to portals, we are seeing a repeat of that. But we will not likely see a repeat of the exclusive content contracts that made it [reach] even harder. When it comes to branded content, I doubt anyone would give an exclusive [contract for content] again. We are based in the U.S. and currently reviewing which platforms to target, because in some cases you have to double your production costs depending on the platform. So, if you produce for iPhone – you have a set of tools you can’t necessarily use on Flash or Java. Working on Flash is great. It’s a fantastic tool for content providers and it targets a lot of devices, but not all of them. With Java, you have a broader penetration but the quality of what you can do [with content] is lower. So we need to make a choice. It will always be on a ‘cost versus return’ basis.

Q: More app stores also turns up the pressure to improve search and discovery. In fact, a major gripe with app stores is people can’t find the cool apps…What is the problem and how are you going to address it?

A: Search is important, and discovery is key. We aim to be more findable on every platform that we are on, and the new brand will focus on search and discovery as part of the offer. If you look at our B2B2C strategy, we want to be the partner of choice for companies that have high traffic. Why? Because then there are more chances of being discovered. Nokia is one of them [a B2B2C partner]. We are running their download client globally and discussing branded participation in the Ovi store. It [presence in the Ovi store] gives you access to one-third of the mobile population in the world, and that boosts discovery. I have also seen some of the demos at the Nokia stand, and they have been able to cut the number of clicks to discovery.

Another way to increase discovery is to work with carriers. Many operators are sending out RFPs [Request For Proposal] for outsourcing of content verticals, and that provides another channel [for Fox] to be discovered.  These [two] are the most promising but we shouldn’t forget the importance of contextual integration with the Internet companies such as the MySpaces of the world. Web-to-mobile discovery is coming on strong, particularly in the U.S. where the messaging revolution never happened. We are active on that front and focus on being the contextual integration partner for a lot of Web companies that do not have the skills to provide mobile services. Here we are bringing together their Web offer with our mobile offer so they can be discovered through relevancy when consumers are browsing the Web.

Q: What about relevancy and recommendations? During our Netsize interview we chatted off-the-record about some cool things in the pipeline. Can you give me an update?

A: You’ll see this in the new brand and the new user experience we provide around search and discovery. Recommendation – and the cross-sell and up-sell it encourages – is also part of the new strategy. We will have recommendation engines, but I would like to talk about it when I have the whole story.

Q: What about client-based discovery? You have a major brand that would also allow you to be a destination on the handset.

A: We have a WAP store, a Flash mobile client with Adobe, and we are considering a desktop app with Adobe as well. We are active on all these fronts and you will see the products as part of the new branding. Client-based discovery is great when you have branded content, as we do, to wrap around the client. This way the consumer gets part of the content for free in order to download it for the first time. But the client and desktop [strategy] only works if you have a fantastic piece of content in the first place that you can convince a consumer to download. That way you hide, in a way, the technology behind the content.

***

NETSIZE GUIDE 2009 (Download your free copy of the book by clicking here.)

Q: You are renaming your company Fox Mobile Group. Does this new identity also signal a shift in strategy? If so, what is new besides the name?

A: Obviously, now that we are 100 percent owned by News Corp., we’re not just Jamba any more. But there is more to it than that. This also allows us to launch new brands in the future, which is what we plan to do in the U.S. soon. As a result, we can run a portfolio of brands, giving each its own legs and own possibilities as part of the Fox Mobile group. We’re also renaming because we want to be associated with [parent company] Fox on a B2B level.

Q: That’s very different from your D2C strategy to this point. Why the new focus and what are the growth opportunities?

A: The first opportunity is on-deck with the operators. In our company, we have built up competencies in content creation, content licensing, and sales and marketing. The strategy is to be part of their offer or, in some cases, to be their partner of choice if they choose to outsource the management of part of their content portal management to outside companies. If they’re a large carrier with operations in several countries and they want to centralize that outsourcing, then it’s clear there are only a few companies they can partner with globally that can manage that – and we definitely want to be one of them. It’s a strategy we are pursuing actively, especially in Europe. The trend is less progressed in the U.S. There is a massive opportunity and a difference to the way the market was a year ago. As you know, this trend [to content management outsourcing] was taking place before the economic crisis hit. Now we see it accelerating.

Another aspect of our B2B strategy is to be on-deck with some of the OEMs. Clearly, the success of the application store on iPhone in the U.S. has spurred a lot of interest among other more global [handset] manufacturers. The question for them is: Would it be better to have a third-party company [like ours] managing their activities, in terms of [managing] the applications store or [managing] content provision to consumers in multiple countries. Clearly, these handset makers have proprietary content services; just look at the example of Nokia and Ovi. However, they also offer download services, and last year [in our Netsize guide 2008 interview] we had already discussed the model in which third-parties sell their content through the download client. Today we have a situation where handset manufacturers are promoting their own services and brand. But they are also becoming a distribution mechanism for third-party companies. Because they realize they can’t possibly cover the whole spectrum of potential content and services that the consumers want with their own devices, they are making some of the real estate available to companies like us to deliver services through a client. The good news: It enhances both the value of the handset and the value of the content because it is distributed over millions of handsets.

A third aspect of our B2B strategy is about working with Internet companies that have high traffic. An example is our launch with MySpace in the U.S. at the end of September [2008]. It’s a contextual integration project in which we work with a partner to optimize their traffic and conversion of that traffic into sales of mobile content.

We are currently developing tools we can share with some of these Internet companies that would effectively allow them to start a mobile business without investing in a mobile business.

Q: What is your vision of convergence and the role of mobile TV and video in the mix? How are you positioning Fox Mobile Group to take advantage of the opportunities?

A: A cross-platform approach is important because consumers do not, and will not, differentiate between mobile and PC in the future. I think they [consumers' experiences] will start to converge in the next two or three years. For this reason, we’re exploring ways to combine TV, movies, and games consoles into one cross-platform offer.

That said, video and video streaming are high on my radar screen. The networks are mature and adoption rates of consumers in the U.S. for streaming channels are amazing – and we are on-deck [in the U.S.] with AT&T, Sprint, and Verizon providing channels for their streaming offer to consumers. In fact, the U.S. will soon become one of the hotbeds of technology because consumers [there] completely leapfrogged mobile messaging and are going straight for mobile data services.

Of course, video streaming is a technology that was hyped years ago. It never took off in Europe the way it should have, but it’s flying high in the U.S. I also think there is huge potential in approaches that combine streaming and downloads. We offer [streaming] content to carriers in the U.S. as part of Fox, and we are also looking at ways to integrate some of our product offers, such as Jamba or Jamster.

Q: On the topic of video streaming, do we “snack” video content? Or do we want a range of options that include full-length programming?

A: Will consumers want to watch a movie on their mobile phones? I’m skeptical. It’s more a combination of short clips – three to five minute snack clips – which are TV programming reformatted for mobile. There’s also a place for medium length [video] offer, but I find 10-12 minutes is the maximum [length] you want to offer, regardless of the type of content or its format. We have figured out what consumers want, but I can’t share too much of it now. I advise you to check out what Verizon and Sprint in the U.S. offer their consumers on-deck as part of the flat-rate data plans. To be clear: Flat-rate data plans are a must for any video services to happen.

Q: You mention pricing, what models are you exploring?

A: Consumers are getting smarter and they want more quality for their money. We know from our own research that a majority of people want to have mobile content. They’re just afraid to start a transaction because they don’t know what they’re getting in return, and they don’t how much they’ll be billed. That is something we want to change. It’s an area we will focus heavily on in our new brand launch this year.  Offering consumers a clear idea of what they are paying for? I think that’s going to be revolutionary in this industry; I don’t think this has ever been offered by anybody before.

The ad-funded model is interesting. However, in the mobile space, I see purely ad-funded models being very challenged in the next two years. I cannot see a solely ad- funded model succeeding in the market when the volumes out there needed to justify an ad-funded model in the first place are so small. Not only that, but we are now facing a credit crunch.

There are hybrid models [based on ad-funded], and we are experimenting with a few, as well as ways to offer a paid model that is somehow complemented by some element of ad-funded approach. But we are keeping with our premium content or paid content model for the majority of the activities that we have. Overall, it’s quite difficult today, unless a company can achieve tens of millions of impressions or unique visitors, to see how an ad- funded model could start to work.

Q: What are the key trends you see in 2009? What does the industry need to focus on in order to achieve success?

A: We hear a lot about technology, but what is missing in this business is blockbusters.What is missing is something really exciting, either on a product or content level, to shake up the industry. There hasn’t been much new since 1999, when ringtones, wallpapers, video streaming and audio streaming broke on the scene. Now we need to bring in the expertise of people who do this professionally, and that means becoming more of a mobile media company than a mobile technology company.

We have the advantage of being part of a media company and we will exploit that [advantage] by being heavily embedded in all the creative processes in the studios.  That way we can release content to the market, the likes of which have not been seen before, particularly in the area of video. In the next year, our focus is going to be on attractive content. Why? Because, for the mobile industry, the integration of mobile into the successful content in Hollywood, in movies, and in TV has barely started.

Disclaimer: MCN has been an MSG supporter; Netsize is an MSG supporter. Peggy Anne Salz is author of the Netsize Guide 2009.

Granted, the iPhone and G1 tackle a laundry list of usability issues. They have been instrumental in raising consumer awareness of the mobile Internet. But what about the vast majority of users on mid-range devices? Recent research from the Yankee Group reports that almost 70 percent of subscribers have either never used the mobile Web on their mobile phones or, only tried it once or twice.

The message is clear: We need solutions that can satisfy the mass market and drive adoption of mobile data. Retrofitting the PC experience for mobile is a patently flawed approach. Put another way, after almost a decade of pushing browser technology, the time has come to reassess the assumptions and use cases.

If we want to reach the 70+ percent on mid-range mobile phones with mobile data services, then we must implement technologies that deliver a genuinely useful mobile Internet experience. Even better if the experience is personal and relevant.

This is where mobile widgets come in. But to understand why mobile widgets are the answer, we need to better understand the two primary mobile data use cases driving their widespread adoption and phenomenal popularity.

Research tells us that consumers using laptops and high-end PDAs are more likely to settle down for longer sessions to consume content (to read emails or surf the Internet) . These sessions typically last 30 minutes to an hour.

Then there are the times that we want to be truly mobile and desire to interact with our pick of mobile data services on the fly. Examples include reviewing flight details on mid-range mobile devices while standing in the line at the airport check-in, nudging a friend on Facebook, or simply checking the latest sports scores. (Typically, these content ‘snacking’ sessions last no more than a few minutes and are done in one sitting.)

In my experience these scenarios are hardly a fit with the browser-centric approach which requires us to unlock the phone, fire up the browser, and find the desired destination. (A tall order if you forgot to bookmark the site in the first place.) Overall, the experience is far from ideal. It can be time-consuming and tedious, which is why – more times than not – the consumer simply gives up.

The mobile widget turns this on its head, empowering consumers to access whatever content and services they choose on their terms. In practical terms, consumers can pre-select the services they are interested in, and have these easily loaded and discoverable on their device. And the content is fresh, relevant and interesting because widgets can update themselves in the background or push notifications when new content is available.

Widgets are paving the way to a powerful new paradigm. Consumers are in control. They can simply select the widget they are interested in and interact with it (on their terms) on the move. This also fits with our habit of “snacking” data services. An interaction like the one I’m describing here typically lasts less than 30 seconds.

Effective widget technology must also fulfil some key criteria.

First, widgets must be easily accessible. This requires excellent usability, but rapid start-up on the device is also essential. Second, they must be easily discoverable. One-click from the idle screen to the widget environment is ideal, which is why so many services choose this as their starting point. Finally, widgets must be flexible and allow consumers to personalize their individual experiences. In other words, users must be empowered to change their widget selection as frequently as they change their tastes, interests and information requirements.

On the technology side of the equation, other measures are essential to deliver a good mobile data experience to the 80+ percent of users who don’t have high-end devices. First and foremost, the mobile industry must ensure that the widget environment operates on a large range of handsets. A key requirement here is openness. Put simply, the widget environment has to be open to a broad range of developers so that users can enjoy the largest possible choice of widgets.

But don’t think it’s enough to simply have a great widget environment on a wide range of devices, with lots of widgets available – or that having a great widget environment somehow negates the role of device OEMs and mobile operators. To the contrary, they have a pivotal role to play in this.

Device OEM’s must enable widget frameworks access to the idle screen, to enable zero-click access to content and applications and to enable a kind of two-way communication between the individual user and the widgets they choose and change to match their preferences.

Apps stores and widget distribution platforms may appear to by-pass the mobile operator, but nothing could be further from the truth.

In fact, operators have a crucial part to play. They must ensure that the widget framework comes properly pre-installed on the user’s device, they must manage a broad services catalogue and a selection of pricing to match (including subscription, advertising and event-based pricing), and they must come up with all-you-can-eat tariffs to increase usage and encourage consumers to explore the wealth of mobile apps and content at their finger tips.

Importantly, mobile operators enjoy consumers’ trust. Users still rely on operators to deliver quality mobile experiences. Operators are the first point of contact if users have billing queries or a question regarding services. Importantly, it’s the operators that provide users with the confidence to become familiar with mobile data services and can inspire consumers to use widgets on a daily basis.

What can we expect when widgets are widely available to consumers and consumers have the confidence to customize them and use them frequently?

For one, consumers will finally and fully take control of their content experiences, personalizing their widgets to pick up on what interests them most in their information universe. I want to keep up with my friends on the fly? It’s simple because I have a widget for this very purpose that seeks out updates and events happening in my social network and pro-actively bubbles them up to my device’s idle screen where I can read and enjoy them. I want to keep up with breaking news about the economy? A personalized widget can update me on the developments that matter – as they happen.

Widgets enable a brave new world of interaction.

They are the key to unlocking mobile data service usage and to encouraging content discovery. More importantly, widgets allow us all – not just those of us that own iPhones and high-end devices – the freedom and flexibility to choose and customize our mobile data experiences. With widgets, I can make the mobile Internet my mobile Internet – and access what I want because I want to.

Dave Evans is CTO at SurfKitchen, responsible for the strategic direction and development of SurfKitchen’s Mobile Internet Platform. He leads development of their widget framework enabling mobile operators and their partners to deliver the optimum user experience for mobile Internet and content services.